Member Exclusive   //   December 12, 2023

DTC briefing: How brands are testing the waters with social commerce app Flip

This is the latest installment of the DTC Briefing, a weekly Modern Retail+ column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. More from the series →

When social commerce app Flip officially launched in 2021, it quickly garnered buzz among beauty companies for helping make products go viral.

At the time, over 200 brands had signed on to sell on Flip, such Hourglass Cosmetics, Zitsticka, RMS Beauty and Dr. Jart+. Today, that number is around 3,500 direct-to-consumer brands, and they cover various categories including homeware and grocery. The company expects to end the year with around 4,000 brands and now boasts over 2 million users. This year, the app’s popularity accelerated, climbing the rankings to the top 10 shopping apps in the Apple App Store. Nearly 65% of the app’s users are between ages 25 and 45, with users under 30 being the fastest growing segment.

Brands that have been testing out the app report that it has been able to grow buzz. Flip leverages urgency by offering limited-time deals and free cash. This is one of the reasons brands like hot sauce startup Truff, for instance, found the app compelling for generating immediate engagement. Still, some companies say the sales volume hasn’t yet proven to be earth shattering and the platform lacks some personalization elements that brands rely on post-purchase.

Flip is part of a larger wave of “deinfluencing,” in which brands rely on organic promotions by unpaid customers rather than influencers. Flip makes a TikTok-like video feed that enables any user to post short videos about products they’ve purchased, in exchange for perks like cash rewards to spend on other products. Video creators also earn commissions on any extra sales that result from other end-consumers viewing and purchasing a product through the creators’ videos. 

Indeed, organic posts by users without push from brands is a feature, Flip co-founder and CEO Noor Agha said. “There are no paid influencer brand deals on Flip, and that’s the point.”

Slowly, however, Flip has been incorporating ads already into its program. “A brand can run ads, but they cannot post anything,” Agha said. “So it’s truly about authenticity.” The only way a brand can run an ad, he explained, is by promoting existing user-generated video by a user who’s already purchased and posted about its products. Flip hasn’t disclosed CPMs, but Agha says they are on par with most platforms. Currently, Agha said about 270 brands are running ads on Flip since it launched in September. He added that because the content is free for the brand to use, they typically save about 20% to 30% the cost of producing ads for other platforms. 

A major benefit for brands is that Flip handles the customer service and fulfillment, offering one-click checkout for multiple brands; The company routes items to its two warehouses and ships them in Flip-branded packaging. This is done through the platform Flip is built on, MagicOs, which allows brands to integrate their DTC backends with their Flip accounts.

Insole brand Fulton decided to give Flip a try after its founders experienced it as users. “The commission margins are pretty low and it takes five minutes to set up, so there are no costly drawbacks in doing it,” Libie Motchan, co-founder of footwear inserts brand Fulton, told me. Flip takes a commission fee from every sale, with the percentage depending on the product category; In the case of Fulton, that’s 10%. 

Motchan said the app takes some time to get acquainted with — coming from other pay-for-play social platforms. At first, Fulton was receiving orders of items like branded swag, which aren’t that popular among its own customers.

“I was seeing creators making videos of them,” she said, adding that Flip asks brands to put aside a certain number of products the app allocates to certain creators. “Then I began uploading our own videos of our hero products, and those started going viral getting tens of thousands of views,” Motchan said. “For our highest month of sales, we did about $10,000.” While Flip sales aren’t as big of a revenue stream compared to Fulton’s main DTC business, Motchan said it’s worth continuing to test.

That being said, there are also some customer experience steps DTC brands forgo when selling through Flip, Motachen said, like the ability to send follow up emails and track LTV. But that comes in exchange for getting new audiences to discover her brand through Flip. Outside of creating a Flip account, orders are fulfilled the exact way Fulton ships DTC orders, Motchan said, but the cost of acquisition is much lower than other platforms. “One thing that differentiates it from TikTok Shop or other influencer partnerships is that I have no way to communicate with the users posting about us,” she said.

Flip’s referral system, which offers rewards based on the user’s network and activity, has helped build the platform’s user base quickly. So far the sales have been performing well for hot sauce brand Truff, which is one of the top selling food brands on Flip after joining earlier this year. “We took off on Flip the moment we set up our brand and products on there, so it has been something we’re looking to dive deeper on,” said Truff director of e-commerce Dennis Suermeli. 

“It feels like sales channels like Flip are having their moment right now — the average person doesn’t want a hyper-professionally shot video that is super sales-y anymore,” he said, but instead, they want product recommendations from real ambassadors with real opinions.

Olive oil brand Graza, which joined the platform about four months ago after being approached by Flip, is also seeing traction with sales and virality. “It makes for a lot of success with very low lift on our end,” said CPG consultant Kendall Dickieson, who works with Graza on its marketing strategy. “Sales have been fantastic, and it’s definitely an awareness play,” she said.

Flip has also helped lower the barrier for entry for people already interested in the brand’s products. “A lot of people have wanted to try it and now can do so with the referral cash,” Dickieson said. “So it actually allowed us to become even more accessible financially to a younger demographic.” 

Other brands are more tame with sales expectations. 

Snack brand Ffups is currently on Flip, although founder Sam Tichnor said he hasn’t invested too much time in growing its presence so far. “It seems like a cool channel if you have a Flip go viral or semi-viral, but for a small brand with limited resources, hoping to go viral can’t be a channel strategy,” he said. 

Tichnor said Ffups is “not advertising on the platform since it isn’t a high priority, but maybe that’d be an easier way to build a positive feedback loop.” Like Motchan, Tichnor said he thinks about longevity when investing in social platforms. “My overall concern is if I should be investing time and resources in building out a channel that may be more of a flash in the pan, and for the sake of the folks building the app I hope I am wrong about that,” he said.

“I do worry that once users stop getting all the referral credits, sales will slow down,” Motchan said. “But for now, we’re leaning into it as much as possible.” 

Flip’s Agha encourages brands to at least get on the platform to establish a presence, and integrate early into the Flip ecosystem’s algorithm. Agha said Flip is striving to keep the platform geared at direct-to-consumer brands. “We will never allow copied products from China,” he said, referencing counterfeit dropshipping on platforms like TikTok and Instagram. “I can promise the brands that.” 

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